Recently, the Australian Securities and Investments Commission (ASIC) issued an interim stop order preventing Hirehood Pty Ltd from offering securities through the VentureCrowd Pty Ltd platform using crowdfunding (CSF) fundraising documents.

This interim order aims to protect retail investors who intend to invest in the project, in the public interest. It marks ASIC's first use of its stop order powers under the Corporations Act 2001 in relation to CSF fundraising.

ASIC's action targets the agency arrangement used by Hirehood, which does not allow investors direct ownership of Hirehood's ordinary shares. Instead, shares are held in a nominee capacity by intermediary related parties, representing an equitable interest for shareholders rather than the full legal and equitable ownership typically associated with ordinary shares.

Furthermore, ASIC noted that Hirehood's fundraising documents failed to meet minimum content requirements specified under the Corporations Act and Corporations Regulations 2001, including detailed disclosures about the issuer's business model.

While ASIC acknowledges that the CSF regime aims to provide a flexible and cost-effective fundraising channel, it reminds issuers and intermediaries that enforcement action will be taken in cases of non-compliance with CSF fundraising laws.

ASIC conducts targeted supervision to ensure issuers and intermediaries comply with legislative requirements of the CSF regime. ASIC will actively enforce compliance with the CSF framework and, where necessary, exercise stop order powers or take enforcement action to address any breaches.

The interim stop order is effective for 21 days, unless revoked earlier. Hirehood will have an opportunity to submit its views before ASIC issues any final stop order.